Fannie Mae Tried Loan-Forgiveness Programs
Source: WSJ
Fannie Mae conducted small tests to reduce loan balances of homeowners who owned more on their mortgages than the properties were worth in 2010.
But the mortgage-finance company didn't expand the pilot programs after concluding they were difficult to operate and the benefits weren't clear, according to a letter from the firm's federal regulator.
The loan-forgiveness pilot programs, some of which haven't previously been disclosed, were outlined in a letter sent in April by the Federal Housing Finance Agency to Democratic lawmakers.
They come as the agency, which oversees Fannie Mae and the smaller mortgage agency Freddie Mac, considers whether to accept new funds made available by the Treasury Department to allow some troubled homeowners to receive principal forgiveness. Proponents of principal forgiveness argue that reducing loan balances for troubled homeowners could reduce the chances that those loans default.
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